Finimize - 🥰 Meta gave Nvidia butterflies

What’s going on here?

Chinese tech giant Lenovo designed plans to make Motorola the third-biggest smartphone brand, presumably missing the ability to snap a phone shut after an argument.

What does this mean?

Motorola was the “it” brand back in the 90s, holding 17% of the mobile phone market in the palm of its hand, fittingly. For comparison, Apple and Samsung – today’s two biggest smartphone brands – have around 20% each in their grasp. But ever since diamanté flip phones started being swapped for minimalist smartphones, Motorola’s share has slipped to just 4%. Brand-owner Lenovo, though, believes a focused push could more than double that, according to its plans to propel Motorola to the third-place spot within three years. Stranger things have happened: low-rise jeans are back in style.

Why should I care?

For markets: An Apple a day...

Investors clearly don’t see Apple falling out of favor anytime soon. By paying a pretty penny for the company’s shares, they’ve sent the tech goliath’s valuation to a height barely seen for the last 20 years. Generally, investors obsess over a stock for one of two reasons. Either the company’s tipped for a fast and furious growth, like market stand-out Nvidia, or it’s expected to plod on at a slower but reliable rate. So with Wall Street predicting that Apple will increase profit by a steady and comfortable 8% over the next couple of years, and with a reputation folk feel comfortable betting a mortgage on, it’s no wonder investors are splashing out to stock up.

Zooming out: The market’s due an upgrade.

Investors ought to be careful, mind you. Motorola’s DynaTACs – a nine-inch-tall cell phone that wrangled half an hour of talk time after a ten-hour charge – had Wall Street traders entranced in the 80s, before Nokia came along with more pocket-sized brick phones, à la Jurassic Park. So Apple and Samsung devices might seem irreplaceable at the moment, but history does have a habit of repeating itself.

What’s going on here?

Forget seeking dinner dates and expensive presents: Nvidia might’ve found a fruitful, rewarding partnership in Meta’s artificial intelligence project.

What does this mean?

Meta’s no stranger to making extravagant purchases, pouring billions into big bets like the metaverse as if it was handing over $6 for a coffee. Well this year, Meta’s chosen Nvidia’s chips – the type that can power AI systems – as its latest fascination. In a bid to steal a march on other high-tech competitors, Meta indicated that it’ll be buying 350,000 top-of-the-line chips. They don’t come cheap, though: in fact, they’re swapping hands for up to $40,000 on the second-hand market. And even if Nvidia charges Meta half of that, the deal could make the chipmaker close to $10 billion in revenue from Meta alone this year.

Why should I care?

For markets: Budgeting pays off – except this time.

Meta’s spending habit hasn’t gone unchecked. Against the threat of a recession, the company slimmed down the funds it funnels into visionary projects, focusing instead on lowering costs to maximize profit. That discipline paid off – literally: Meta’s profit margin and stock price both benefitted. But this spree will be given a pass. Investors are more sold on AI’s potential than they ever were with the metaverse, so they’ll likely overlook the break in frugality if it means owning a chunk of a potential AI trailblazer.

Zooming in: Gossip can be valuable.

It’s not every day that investors get eyes on companies’ detailed spending plans. And they’ll be especially glad the release centered around Nvidia: the chipmaker ran the stock market last year and is tipped by analysts to double its revenue this year, so investors are looking for any clues that could support or undermine that prediction. If Meta does go through with those plans, it won’t take too many more Meta-sized orders for Nvidia to live up to expectations.